UPS wins first FAA approval for drone delivery airline

United Parcel Service received federal approval to operate a fleet of drones, giving it broad privileges to expand unmanned package delivery, the shipping giant said Tuesday.

The company’s Flight Forward subsidiary plans to use the approval to deliver packages to hospital campuses, with potential to expand to other services later. It’s the first time the Federal Aviation Administration has granted such broad approval to a company to operate a fleet of drones as an airline.

The approval is a milestone in commercial drone delivery, with companies including Amazon, Uber and Google parent Alphabet, under its Wing Aviation unit, racing to add unmanned aircraft to their fleets to save on costs and deliver goods faster.

Wing is planning to start trials of consumer goods delivery by drones with Walgreens and with UPS rival FedEx in Christiansburg, Virginia, this month. Approvals for some tests, unlike UPS’ broad certification, are limited to small areas, and restrictions remain about flights over densely populated areas.

The FAA’s Part 135 certification, which charter airlines use, gives UPS the ability to fly at night and out of sight of the operator. The approval will also allow the drones to carry cargo over 55 pounds.

UPS will start using the approval for package delivery to hospital campuses, but CEO David Abney said that could expand to other “campus-type environments” and even homes.

“When the (FAA) regulations are complete we certainly believe there are residential opportunities and other delivery opportunities that will help supplement the incredible group of drivers we have all over the world,” Abney told CNBC.

UPS said it applied for the FAA’s approval in July. The Atlanta-based company in March started flying medical samples by drone for WakeMed hospitals in Raleigh, North Carolina. It has since conducted some 1,000 revenue flights there.

“This is a big step in safety integrating unmanned aircraft systems into our airspace, expanding access to healthcare in North Carolina and building on success of the national (Unmanned Aircraft Systems) Integration Pilot Program to maintain American leadership in unmanned aviation,” Transportation Secretary Elaine Chao said in a release.